Insurer Goes On Offensive Before '60 Minutes'Oct 4, 2002 | AP
UnumProvident Corp., the nation's largest disability insurer, went on the offensive about an upcoming 60 Minutes report that it considers unfair, a strategy that an analyst predicted will pay off with investors.
The Chattanooga-based company, which insures some 25 million people, told stockholders Wednesday to expect a possible ''misrepresentation of the facts'' when the television show airs a segment on how the company handles disability claims.
The report, which the company expects will run either Sunday or Oct. 13, stems from a lawsuit filed in July by Dr. Patrick McSharry.
McSharry, who was dismissed as medical director in January after 14 months with the company, contends UnumProvident routinely denied disability claims and then turned to its medical advisers to ''provide language and conclusions'' to support the denials.
Several dozen policyholders also have filed lawsuits against the company, alleging their applications for claims were unfairly denied.
More than 60 policyholders seek McSharry's help in deciding their cases, his Chattanooga attorney Harry F. Burnette said.
On Wednesday, UnumProvident issued press releases, sent a video of remarks by the company's president to employees, wrote to shareholders and distributed a fact sheet to stock analysts in anticipation of the 60 Minutes report.
In a letter to ''employees, friends and co-workers,'' Harold Chandler, the company's chairman, president and chief executive officer, predicted that a ''negative story'' will be based on allegations by opposing lawyers and fired employees, including McSharry.
Kevin Tedesco, a spokesman for 60 Minutes, said the show has a policy of ''not commenting about stories we are still reporting on.''
After the company's announcement Wednesday, UnumProvident's stock fell nearly 10%, dropping $2.01 and closed at $19.26 a share. Trading volume was more than double the average daily amount.
Yesterday, the stock dropped again to $19.12 a share.
David Lewis, a senior financial analyst with SunTrust Robinson Humphrey in Atlanta, said the company was smart to head off a potentially damaging story rather than wait until after it airs, calling it ''proactive'' in easing investor reaction.
McSharry, who lives near Chattanooga, has an unlisted home phone number and could not be reached for comment yesterday.
His suit seeks back wages and a return to the job that paid ''six figures,'' Burnette said. It also seeks punitive damages.
Burnette said he was trying to get the case returned to state court, where it was originally filed.
''The bottom line is, what Dr. McSharry says happened, I see no evidence that it didn't. They are doing stuff that is illegal. I can understand them wanting to put their best face on that,'' Burnette said.
UnumProvident spokeswoman Linnea Olsen said the company has ''about 30%'' of the nation's disability insurance business; the next largest competitor has about 9%.
In 2001, ''we handled about 400,000 claims and only about 2% were denied,'' she said. Of those, ''less than four-tenths'' prompted lawsuits, she said.
Olsen said she did not have numbers available on the percentage of denials or lawsuits pending from previous years.
About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded.
UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, where there are more than 2,217 workers.
Olsen said UnumProvident employs about 100 doctors at claims offices in Chattanooga, Portland, Worcester, Mass., and Glendale, Calif.